Compound Interest Practice Test 6

Question : 2 of 9

Marks: +1, -0

A sum of money lent at compound interest for 2 years at 20% per annum would fetch Rs 482 more if the interest was payable half-yearly than if it was payable annually. The sum is:

Rs 10,000
Rs 20,000
Rs 40,000
Rs 50,000

Validate

Solution:

If interest was payable annually,
then

A=P(1+20/100)^2

......(i)
If interest was payable half yearly then

⇒A+482=P(1+10/100)^4

......(ii)
Subtracting equation (i) from (ii)

482=P[(110/100)^4-(6/5)^2]

482=P[14641/10000-36/25]

P = Rs 20, 000

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